NEW YORK - The jobless rate in the UShas reached 9.5 percent, according to latest data revealed Thursday. The bleak picture sends stocks down, as the Dow Jones Industrial Average closes at its lowest level in six weeks
Major stock indexes fell more than 2.6 percent after the government said the U.S. unemployment rate hit a 26-year high. The Dow Jones industrials closed at their lowest level in six weeks.
As investors sold off stocks amid fresh concerns about the economy, they moved into the safety of bonds, pushing Treasury yields lower. Recession-weary employers in the U.S. slashed 467,000 jobs in June, the Labor Department reported, far worse than the 363,000 that economists expected and a grim signal that the path to recovery will be bumpy. The jobless rate rose to 9.5 percent from 9.4 percent in May.
The report - one of the most closely watched economic indicators - disappointed investors who had become encouraged by positive signs recently that key areas of the economy including housing and manufacturing were showing modest signs of improvement.
The stock market rallied furiously this spring off of 12-year lows beginning in early March on hopes for a recovery, but the upward momentum stalled in mid-June as doubts began to emerge about whether the economy had really found a bottom. The June jobs report was the latest blow to the market's confidence.
"There's more and more evidence mounting against this rally continuing," said Doug De Groote, a managing director at United Wealth Management. Consumers are likely to lead the nation out of the ongoing recession, but that won't happen if more people are losing their jobs, he said.
"This is part of the market recovery," said Roy Williams, CEO of Prestige Wealth Management. "You're going to get bad news." Williams predicted the unemployment rate is likely to reach 11 percent.
As stock prices fell across the board, other signs of investor unease emerged. Treasury prices rose, driving the yield on the 10-year note down to 3.50 percent from 3.54 percent late Wednesday.
An upbeat report about May factory orders was not enough to boost traders' confidence amid the weak employment numbers. The Commerce Department said total orders rose 1.2 percent in May, better than the 0.8 percent increase that economists had expected.